U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from: to:
Commission file number: 000-26361
Creative Beauty Supply, Inc.
(Exact name of Small Business Issuer in its charter)
NEW JERSEY 22-3392051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
380 Totowa Road, Totawa, NJ 07512
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (973-904-0004
Check mark whether the Issuer (1) has filed all reports required by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to the filing requirements for
at least the past 90 days. YES: X NO:
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PREVIOUS FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by the court.
YES: X NO:
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date: 1,864,650
Transitional Small Business Disclosure Format. YES: NO: X
PART I FINANCIAL INFORMATION
CREATIVE BEAUTY SUPPLY, INC.
BALANCE SHEET
ASSETS
December 31, March 31,
2000 2000
----------- ---------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 294,427 $ 321,509
Accounts receivable 3,401 3,634
Inventory 79,525 67,707
Prepaid expenses 2,105 2,248
--------- -----------
TOTAL CURRENT ASSETS 379,458 395,098
PROPERTY AND EQUIPMENT, net of accumulated
Depreciation 794 2,052
--------- ----------
TOTAL ASSETS $ 380,252 $ 397,150
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITES
Accounts payable $ 19,578 $ 16,217
Payroll taxes withheld and accrued 1,000 55
Accrued expenses -officers salaries 150,577 128,654
Accrued expenses 20,125 20,509
---------- ----------
TOTAL CURRENT LIABILITES 191,280 165,435
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.001, authorized 10,000,000
Shares , issued and outstanding -0-
Common stock, par value $.001, authorized 100,000,000
Shares, issued and outstanding, 1,864,650 shares 1,865 1,865
Additional paid-in-capital 472,541 472,541
Accumulated deficit (285,434) (242,691)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 188,972 231,715
------- -------
TOTAL LIABILTIES AND STOCHOLDERS' EQUTIY $ 380,252 $ 397,150
========= =========
The accompanying note is an integral part of these financial statements.
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended December 31, Three Months Ended December 31,
2000 1999 2000 1999
---------------------------------------------------------------------
NET SALES 183,451 $ 188,809 $ 59,219 $ 62,153
COST OF GOODS SOLD 130,617 151,080 42,169 50,728
------- ------- ------ ------
GROSS PROFIT 52,834 37,729 17,050 11,425
------- ------- ------ ------
OPERATING EXPENSES
Salaries - officers 45,975 46,092 15,975 15,900
Payroll taxes 2,001 1,928 604 687
Auto and delivery 6,059 10,055 2,333 3,187
Employee welfare 5,462 3,076 2,300 1,103
Insurance 2,438 2,466 876 825
Office 2,235 1,375 644 607
Professional fees 25,678 16,914 1,399 2,450
Rent 11,403 10,800 3,801 3,600
Store supplies 1,061 1,660 304 913
Taxes 240 250 - -
Telephone 1,917 1,440 648 490
Utilities 1,388 1,478 313 595
Miscellaneous 674 468 293 75
Depreciation and amortization 1,258 1,835 176 697
------- ------ ----- -----
TOTAL OPERATING EXPENSES 107,789 99,837 29,666 31,129
------- ------ ------ ------
LOSS FROM OPERATIONS BEFORE
OTHER INCOME (54,955) (62,108) (12,616) (19,704)
OTHER INCOME
Interest Income 12,212 12,749 3,875 4,218
------- ------- ------- --------
NET LOSS (42,743) $ (49,359) $ (8,741) $ (15,486)
======= =========== ======== =========
LOSS PER COMMON SHARE, BASI
AND DILUTED $ (0.02) $ (0.03) $ (0.00) $ (0.01)
======== ======== ======== =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,864,650 1,864,650 1,864,650 1,864,650
========= ========= ========= =========
The accompanying note is an integral part of these financial statements.
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999
(UNAUDITED)
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(42,743) $(49,359)
Adjustments to reconcile net loss to
Net cash from operating activities:
Depreciation and amortization 1,258 1,835
(Increased) decrease in operating assets:
Accounts receivable 233 598
Inventory (11,818) (11,465)
Prepaid expenses 143 2,334
Increase (decrease) in operating liabilities:
Accounts payable 3,361 (384)
Payroll taxes withheld and accrued 945 562
Accrued expenses 21,539 22,203
------- --------
NET CASH USED BY OPEATING ACTIVITIES (27,082) (10,746)
CASH FLOWS FROM FINANCING ACTIVITIES:
Registration cost - (5,000)
------- --------
NET CASH USED BY FINANCING ACTIVITIES - (5,000)
--------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (27,082) (15,746)
CASH AND CASH EQUIVALENTS - beginning of period 321,509 324,683
--------- --------
CASH AND CASH EQUIVALENTS - end of period $ 294,427 $ 308,937
========= =========
The accompanying note is an integral part of these financial statements.
CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE1 - BASIS OF PRESENTATIONS
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the nine months ending December 31,
2000 are not necessarily indicative of the results that may be
expected for the year ended March 31, 2001. The unaudited financial
statements should be read in conjunction with the financial statements
and footnotes thereto included in the Company's Form 10KSB for the
year ended March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Trends and Uncertainties. Demand for the Company's products will be
dependent on, among other things, market acceptance of the Company's
concept and general economic conditions, which are cyclical in nature.
Inasmuch as a major portion of the Company's activities is the receipt
of revenues from the sales of its products, the Company's business
operations may be adversely affected by the Company's competitors and
prolonged recessionary periods.
Hair styles in the industry change drastically from season to season.
The recent trend away from straight hair will have a favorable impact
on the sales of the Company's hair products such as perms, etc.
although the extent of this impact is indeterminable.
Capital and Source of Liquidity. In April 1999, the Company renewed
its lease for a term of three (3) years commencing May 1, 1999 at a
monthly rental of $1,200 per month for the first twelve (12) months and
$1,300 a month for each of the remaining twenty four (24) months.
For the nine months ended December 31, 2000, the Company did not
pursue any financing activities.
For the nine months ended December 31, 1999, the Company had
registration costs of $5,000 resulting in cash flows from financing
activities of ($5,000).
For the nine months ended December 31, 2000 and 1999, the Company
pursued no investing activities.
Results of Operations.
Assets for the nine months ended December 31, 2000 decreased by approx.
$15,640.
Liabilities for the nine months ended December 31, 2000 increased by
approx. $25,845.
Working capital at December 31, 2000 was approx. $188,178 and at March
31, 2000 it was $229,663, a decrease approx. $41,485. The decrease was
a direct result of an increase in accrued salaries for its president in
the amount of $15,000, an increase in accounts payable to suppliers of
$3,361 and a decrease in cash used in operations of $27,082.
Stockholders Equity decreased by the loss for the nine months. There
were no equity transactions during the period.
Sales for the nine months ended December 31,2000 was $183,451 as
compared to $188,809 for the nine months ended December 31, 1999, a
slight decrease. Sales are basically flat. The Company has not been
able to increase its customer base. The Company in 1999 increased its
prices, therefore, increasing its gross profit on sales. The gross
profit percentage for the nine months ended December 31, 1999 was approx
20% as compared to the gross profit percentage for the nine months ended
December 31,2000 of approx. 28%.
There were no increases in salaries.
Auto and delivery expenses for the nine months ended December 31, 2000
were $6,059 as compared to $10,055 for the same period ending December
31, 1999, a decrease of $3,996. In 1999 the company's delivery van
required extensive repair work to its motor and transmission while in
2000 no major repairs were done.
Employee welfare cost (employee hospitalization cost) increased by
$2,386 in 2000 for the nine months as compared to the same period in
1999. The increase was due to higher premiums charged by insurance
carrier. The number of employees being covered were the same.
Office supplies and expenses increased by $860 in 2000 over the same
nine month period in 1999. The increase was mainly due to the purchase
of computer supplies that were necessary in order resolve Y2K issues.
8
Professional fees increased by approx. $8,764 for the nine months ended
December 31,2000 as compared to the same nine month period in 1999.
This was due to increased cost for legal and accounting services for
quarterly and annual SEC filings and increased cost to the stock
transfer agent for maintaining the Company's stock records and services.
Rent increased due the Company's lease expiring in April 1999 and
increased monthly rental payments for the next three years.
Plan of Operation. During the next twelve months, the Company intends
to obtain new product lines by negotiating with various manufacturers.
If the Company does not achieve the milestones within the above time
schedule, their operating costs will be higher and the Company will
lose even more money.
The Company's liquidity will be decreased due to little or no increase
in revenue and higher operating costs.
The Company is not delinquent on any of its obligations even though the
Company has had limited operating revenues. The Company intends to
market its products utilizing cash made available from the sale of its
products. The Company is of the opinion that revenues from the sales
of its products and the proceeds from the sale of its securities will
be sufficient to pay its expenses.
The Company does not have any or intends to have any derivative
instruments or hedging activities.
9
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Not applicable.
(b) Not applicable.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Creative Beauty Supply, Inc.
(Registrant)
Dated: February 9, 2001
By: /s/ Carmine Catizone
----------------------------
Carmine Catizone, President